This article explores why the implementation of new technologies and ideas hasn't led to improved supply chain performance. It argues that the root cause is a mismatch between product type and supply chain structure. The author proposes a framework to classify products based on demand patterns as either functional or innovative, each requiring a distinct supply chain approach.
Never has so much technology and brainpower been applied to improving supply chain performance. Point-of-sale scanners allow companies to capture the customer’s voice. Electronic data interchange lets all stages of the supply chain hear that voice and react to it by using flexible manufacturing, automated warehousing, and rapid logistics.
But the performance of many supply chains has never been worse. In some cases, costs have risen to new levels because of adversarial relations between supply chain partners as well as dysfunctional industry practices such as an over-reliance on price promotions. And supply chains in many industries suffer from an excess of some products and a shortage of others because of an inability to predict demand.
Why haven’t the new ideas and technologies led to improved performance? Because, Marshall Fisher says, companies lack a framework for deciding which ones are best for their particular situation. Fisher offers such a framework to help managers understand the nature of the demand for their products and devise the supply chain that can best satisfy that demand.
Once products have been classified on the basis of their demand patterns, they fall into one of two categories: they are either primarily functional or primarily innovative. And each type of product requires a distinctly different kind of supply chain. The root cause of the problems plaguing many supply chains, the author contends, is a mismatch between the type of product and the type of supply chain.been applied to improving supply chain performance.
SUPPLY CHAIN MANAGEMENT TECHNOLOGY INNOVATION DEMAND PLANNING PRODUCT CLASSIFICATION
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